California taxpayers burned by government-backed Solar City

One of the worst energy policies being perpetrated by the government on California taxpayers is the subsidization of alternative energy.Solarpower has been one particular area of concern. The Taxpayers Protection Alliance (TPA) has been doing extensive research and grassroots outreach to households with SolarCitysolarpanels.

The biggest concern is that rooftop solar companies, like Elon Musk’s SolarCity, Corp., which are politically connected and favored, have found a way to claim the tax credit for themselves. These companies discovered that if they lease the rooftop solar systems to homeowners, the companies themselves can claim the federal tax credit as well as all state and local incentives.

Solar companies are raking in taxpayer money not just from Washington, D.C., but also from state and local governments. For example, California’s Go Solar California! campaign, a “joint effort of the California Energy Commission and the California Public Utilities Commission,” detailed the cost to taxpayers for the California Solar Initiative. The top 20 markets for solar power in California have cost state taxpayers more than $1.5 billion.

Raoul Lowery Contreras laid out exactly how much SolarCity is costing taxpayers, and it’s not pretty:

"Musk’s Solar City company, for example, have [sic] profited by receiving over $400 million in cash from the state and federal governments plus commissions from the financing his company arranges for homeowners. It pounds sun drenched cities like Las Vegas with a barrage of radio and TV ads, for example."

The story gets worse for the taxpayer, because SolarCity is posting losses and the losses are massive. This means that taxpayers are propping up a company that is harming consumers. This rip-off is being done with help from their friends in Washington and at the state and local level who are writing the rules that are enabling them to do it all on someone else’s dime. Recently, Bradley Blakeman of Newsmaxdetailed the losses that are being incurred at the taxpayers’ expense, and the fact that SolarCity wants to spend even more as they are bleeding government money:

"On August 8, Energy Daily reporter Eric Lindeman eloquently described how the 'Wall Street darling' SolarCity 'took a beating on Wall Street' after the company reported quarterly losses of $40 million in the first quarter and almost $50 million in the second, and projected even further losses for the rest of the year.

“The company expects to lose more than $1 billion from this year through 2016,” Lindeman reported. Some analysts have taken a bewildering positive spin on SolarCity’s “earnings” report, emphasizing that SolarCity’s tens of millions of dollars in net loss was not as bad as they had expected it to be. That kind of anomalous praise is the financial equivalent of congratulating a friend who lost his legs because he might also have lost a hand. Not exactly investment-inspiring.

Almost as baffling, SolarCity announced in June that, notwithstanding its massive and continuing net loss, the company is going to borrow another $750 million to buy a solar panel manufacturing company and build a manufacturing plant.

As for the $750 million that SolarCity wants to borrow, the reason may be because the program is now expanding. There are states with very ‘generous’ alternative energy subsidy incentives including like Hawaii, who may soon see SolarCity coming to an island near them as Franklin Center President Jason Stverak wrote earlier this summer:

"Now, SolarCity is setting its sights on Hawai’i’s generous solar tax credits and incentives, hoping to pick off customers on Oahu and the Big Island through the same questionable promises of lower electricity bills that have lured many California customers into financially devastating leases. Hawai’i residents are already involuntarily lining the pockets of solarfirms through their tax dollars, and should do their homework before putting a panel on their roof."

Taxpayers and consumers need to be aware of what is happening here because they are the ones who are footing the bill for products that are not doing the job and hurting the value of homes in the process. Last month, the Nevada Policy Research Institute reported on the lack of return on investment in exchange for the kinds of subsidies that SolarCity was getting:

An expert-witness report just filed in a constitutional challenge to the State of Nevada’s “Catalyst Fund” says taxpayer-dollar subsidies like the $1.2 million the state is attempting to give SolarCity, Inc. “do not provide any net benefit to the state or to its citizens.”

Dr. Randall G. Holcombe — DeVoe Moore Professor of Economics at Florida State University — made the comments and is an expert witness in the lawsuit brought by NPRI’s Center for Justice and Constitutional Litigation (CJCL) to defend the Nevada Constitution’s ban on the gifting of taxpayer funds to private corporations.

TPA will continue to monitor SolarCity and other solar firms that try to squeeze taxpayers. Investing in solar power is fine as along as taxpayers aren’t exposed to the financial ramifications of the industry’s failures. The country already spent $500 million on one solar power failure with Solyndra, the country can’t afford more Solyndras.

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